Overseas Headlines-October 30, 2019

October 30, 2019

United States:

U.S. Economy Holds Up With 1.9% Growth on Consumer Strength

“A resilient American consumer helped the U.S. economy expand more than forecast in the third quarter, assuaging concerns for now of a more pervasive slowdown tied to weakening business investment and faltering export markets. Gross domestic product increased at a 1.9% annualized rate, according to Commerce Department data Wednesday that topped forecasts in a Bloomberg survey that called for 1.6% growth. Still, that’s down from 2% in the second quarter and is the lowest since the end of 2018. The gain mainly reflected strength in consumer spending, the biggest part of the economy, which increased at a 2.9% rate and exceeded projections for a 2.6% rise. For businesses, nonresidential fixed investment fell the most since late 2015. “It’s the same theme: Strong consumer, weak business,” said Michelle Girard, chief U.S. economist at NatWest Markets. “The question is, which wins out? We lean toward the latter. We think that actually the weakness in business will be more persistent and that ultimately the consumer will soften up.” At the same time, “nothing in these numbers necessarily answers that question,” Girard said. “It just continues to suggest that is the issue.” The growth figures come just hours before Federal Reserve officials are expected to announce a third-straight interest-rate cut to support the expansion and ahead of Friday’s jobs report, which economists project will show hiring slowed further. Signs of stabilization may be a welcome sign for President Donald Trump as he campaigns on his economic record, though his trade war with China and faltering global growth have weighed on the expansion. A separate report Wednesday from the ADP Research Institute showed private payrolls rose by a better-than-estimated 125,000 in October, rebounding somewhat from a four-month low.”




U.K. Company Insolvencies Rise to Highest Level Since 2014

“The number of companies in England and Wales unable to pay their debts rose to an almost six-year high in the third quarter as the Brexit crisis intensified. There were 4,355 company insolvencies, 0.4% more than in the second quarter, the Insolvency Service said. The number of companies entering administration, where an accountancy firm is appointed to help recover money for creditors, jumped by 20%. The U.K. economy has lost momentum since the 2016 vote to leave the European Union, with business investment hit particularly hard. Growth in the first quarter was boosted by stockpiling ahead of the original March 29 Brexit deadline but separate figures Wednesday showed wide disparities between regions. London expanded by 1.2%, double the U.K. average, and solid performances were also seen in northwest and southwest England, the Office for National Statistics said. But output contracted in Wales, the East Midlands and Yorkshire and The Humber. In the latest 12 months, the construction industry saw the highest number of insolvencies, followed by administrative and support services, wholesale and retail, and vehicle repair firms. The number of individuals going bust rose marginally over the quarter, the Insolvency Service said.”




Last-Minute India Demands Jeopardize 16-Nation Asian Trade Pact

“India keeps making last-minute requests after it agreed to terms for the world’s largest regional trade agreement, potentially preventing Asian leaders from announcing a breakthrough next week on the 16-nation pact during a summit in Bangkok, people familiar with the situation said. In recent days, India angered other negotiators by making additional requests on the China-backed pact covering half the world’s population, said the people, who asked not to be identified because the talks are private. Leaders had planned to announce a preliminary deal on Nov. 4 during meetings hosted by the Association of Southeast Asian Nations, the people said. Chief negotiators are still confident they can reach a broad agreement on the deal to reduce tariffs, known as the Regional Comprehensive Economic Partnership (RCEP), during a planned meeting on Thursday in Bangkok, the people said. Any announcement would pave the way for nations to finalize the details on the legal framework in the coming months. A breakthrough after seven years of talks would mark a win for trade liberalization in an era of rising tariffs and resurgent nationalism. The deal would also further integrate Asia’s economies with China at a time when U.S. President Donald Trump is seeking to convince the region to shun Chinese infrastructure loans and 5G technology. India, which has raised some tariffs under Prime Minister Narendra Modi, has long been the main holdout on an RCEP deal due to strong domestic opposition over fears the country would be flooded with cheap Chinese goods.”


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